DOL and IRS Announce Emergency COVID-19 COBRA and Claims Rules

On April 29, 2020, the Department of Labor (DOL) and the Internal Revenue Service (IRS) issued a Notice that announced a “pause” in the timelines that affect many COBRA and HIPAA Special Enrollment Period timelines during the National Emergency due to the COVID-19 pandemic. It also provides for additional timelines relating to all health and welfare plan claim filings and appeals.

The National Emergency declaration for COVID-19 was issued on March 13, 2020, and as of the date of this writing, is still in effect. However, for purposes of this Notice, the “pause” date is set to begin on March 1, 2020. According to the Notice, the period from March 1 through 60 days after the date the National Emergency is declared ended is known as the “Outbreak Period.”

COBRA Timeline Changes During National Emergency

Normally, group health plan Qualified Beneficiaries (QBs) have 60 days from the date of a COBRA qualifying event to elect COBRA coverage, or in the case of a second COBRA qualifying event, to make a new COBRA election. Once a COBRA election is made, the first payment (going back to the date of the COBRA qualifying event) is due no more than 45 days later. After that, plan sponsors must allow at least a 30 day grace period for late COBRA payments.

According to the Notice, all of these timelines are affected. The 60-day election “clock” is paused beginning March 1, 2020 or later until the the end of the Outbreak Period. Similarly, the 45-day first payment “clock” is also paused during the Outbreak Period, as is the 30-day grace period for making COBRA payments.

Example

ABC Company’s group health plan is subject to COBRA continuation coverage. Jane Jetson and her family are covered under ABC’s group health plan. On February 1, 2020 Jane terminates employment at ABC, and on February 5th, Jane receives her COBRA election notice informing her she has 60 days from February 1st to make an election. Normally, that election period would end on April 1, 2020, 60 days from February 1st.

However, with the new DOL/IRS Notice, the “pause” button on the 60 day election period was hit on March 1st, the beginning of the Outbreak Period, so the 60 day clock stops at 29 days and doesn’t resume until the end of the Outbreak Period.  For sake of this example, let’s assume the National Emergency declaration is lifted on May 31, 2020. On July 30, 2020, 60 days after May 31st and thus the end of the Outbreak Period, the “pause” button is lifted and the COBRA election clock restarts for another 31 days to complete the 60 day COBRA election period, which now would end on August 30, 2020.

Continuing with the example and assumptions, if Jane did make her COBRA election to continue coverage on August 30th (the last day to do so), the 45 day clock to make the first payments back to February 1st would begin, and she would have to make all seven months’ payments by October 14, 2020. Of course, by that date she’d also owe payments for September and October as well, although she’d be in the middle of the grace period for October.

Health and Welfare Plan Claims Timelines

Similarly, claim timelines relating to most health and welfare plans such as group medical, prescription, dental, vision, flexible spending accounts (FSAs), Health Reimbursement Arrangements (HRAs), and disability coverage are similarly affected. That is, just as above, for example if a plan provides a 90-day timeline to submit a claim, and that timeline extends into the Outbreak Period, just as the COBRA timeline described above is “paused” so too are the claims and appeals timelines.

HIPAA Special Enrollment Period

Similarly, the 30 day HIPAA Special Enrollment Period (SEP) for qualified changes of status that impacts group health plan enrollment changes is also “paused” until after the end of the Outbreak Period.

Example

Homer Simpson also works for ABC Company, and has elected not to participate in ABC’s group health plan since he has coverage through his spouse Marge’s employer’s group health plan at XYZ Company. On March 15, 2020, Homer and Marge have a baby named Bart, and decide that Homer would like to cover his entire family under ABC’s plan. In normal times, Homer would have 30 days from the date of Bart’s birth to enroll in ABC’s group health plan utilizing the HIPAA SEP.

However, under the DOL/IRS Notice, that 30-day clock is on “pause” until the end of the Outbreak Period. Using the same assumption in the example above, that clock would start on July 30th, and Homer would have until August 30th to enroll his entire family.

Action Items for Plan Sponsors

Plan sponsors will need to pay close attention to this Notice and make proper adjustments in their established COBRA, claims and appeals, and HIPAA procedures to accommodate it. Contact your COBRA and/or health and welfare plan administrators and enrollment vendors to see how they are implementing this new temporary requirement. If Kushner & Company is your FSA, HRA, and/or COBRA recordkeeper, please be aware that we are already working to implement these new requirements.